LORD Fraser of Carmyllie, who is chairing the investigation into the Scottish Parliament building, is the business associate of a controversial property developer who faces bankruptcy.

As he tries to determine why the Holyrood building project is two years late and 10 times over budget, the former lord advocate's co-director in a major hotel is involved in two court actions.

The fact that Scotland's former lord advocate remains on the board has puzzled many people who have had dealings with Michael Johnston, a one-time Dundee plumber.

The former Tory politician's non-executive directorship of the Carnoustie Golf Course Hotel and Resort has also left him liable to criminal prosecution and a (pounds) 5000 fine for the late return of accounts. The figures for 2002 were due in January last year and the 2003 books are also now late. The other directors - Mr Johnston, his wife Jenny, and Martin Delaney, the hotel's chief executive - could also face prosecution.

A spokesman for Companies House confirmed that the accounts were overdue and added: ''We are in correspondence with them.''

Although it is unclear if the hotel's financial situation has improved since 2001, when it had a bank overdraft of more than (pounds) 8m and an operating loss of almost (pounds) 1m, Mr Johnston appears to be facing financial difficulty. The Inland Revenue has lodged a petition for his bankruptcy over a debt of around (pounds) 650,000, the fifth such petition since April 2001 and the second by the Inland Revenue in less than 18 months.

A hearing has been set for March 11. The other four bankruptcy petitions - lodged by the Clydesdale Bank, a leisure company, a private individual over a land deal, and the Inland Revenue - were all settled.

Legal action has been initiated against Mr Johnston several times in recent years by companies trying to obtain payment for work done.

These include the architect, builder and interior designer of the luxury links hotel, which overlooks the championship course where Paul Lawrie won the Open in 1999 and will once again host the tournament in 2007.

It attracted (pounds) 1m of public investment from Scottish Enterprise, Angus Council and the Carnoustie Links Management Committee, which administers the area's public courses. As well as giving (pounds) 300,000, the committee agreed a deal to rent offices within the hotel for (pounds) 75,000 a year.

There was considerable disquiet within Carnoustie that part of the course, which was public land, was given over for the development, which boasts suites costing up to (pounds) 950 a night.

Lord Fraser's continued involvement in the project with Mr Johnston, who has had two companies go into liquidation, has puzzled many in the community, particularly since Mr Johnston was fined (pounds) 550 in December for assaulting a staff member who ridiculed his Rolex watch.

George Lamont, a former councillor who resigned from the SNP ruling group of Angus Council because of the secrecy surrounding the hotel development, said: ''I was surprised that he became a director and I am even more surprised that he has remained a director given what has happened, including the punch-up.''

Russell Winter, a former provost of Carnoustie who led an action group in protest at the decision by Carnoustie Links Management Committee to make a donation to the hotel, added: ''I am very surprised he is still involved.''

Mr Johnston is currently being sued for more than (pounds) 1m by former associates in relation to the hotel development. The architect, builder and interior designer all had to start court action against the hotel to obtain settlement of their bills.

Numerous other businesses who have worked with Mr Johnston have had to initiate legal action to try to obtain payment.

Hall and Tawse, the main contractor, started court action against the hotel to try to recover an estimated (pounds) 100,000 in relation to work on the project, and Colin Sutherland, managing director of the company, said: ''Our final accounts for the building of the Carnoustie Hotel have not yet been satisfactorily resolved.''

Architects Wellwood, Leslie of Dundee had to initiate court action over a (pounds) 20,000 debt, as did Pamela Temple, an American interior designer, to recover her fees.

The Carnoustie Golf Links Management Committee also began legal moves against the hotel for (pounds) 103,000 in relation to VAT on tee times, and that too was settled.

Other companies that have had to initiate action for payment include Brown Construction of Dundee; the Clydesdale Bank, which lodged a (pounds) 1.25m legal action against Johnston that was settled out of court; and Glamis architect Fred Stephen over a (pounds) 180,000 debt in relation to another development. That too was settled out of court.

Lord Fraser declined to discuss the hotel or confirm he was still a director when contacted by The Herald.

When asked to discuss the hotel's position, Lord Fraser said: ''I am pleased the Open is coming back in 2007. What more can I say?'' He declined to make any further comment.

In relation to late accounts, he had previously issued a statement: ''The situation will be remedied and, even if late, accounts will be lodged as the law requires and any penalties will be paid.''

The 2001 accounts reveal the hotel, which is backed by the Bank of Scotland and boasts the world's biggest Rolex clock above its entrance, had an operating loss of almost (pounds) 1m for the previous year and its overdraft had risen from (pounds) 159,000 to (pounds) 8.3m. It had also been revalued from (pounds) 8.4m to (pounds) 13.9m.

The accounts indicate that as the directors are ''property developers and not hoteliers'', they planned to sell it as their ''exit route'' and the sale would raise ''adequate resources to repay all borrowings''. They said negotiations were ongoing with potential purchasers. The reported asking price at that time was (pounds) 11m but the hotel remains unsold and is still on the market for almost (pounds) 14m.

Selling agents Graham Sibbald & Co said it had not been actively marketed ''in light of world events'' recently but that was being re-examined in the light of the recent announcement that the 2007 Open would be held at Carnoustie.

Even if a buyer is found there could be restrictions because of an inhibition order on the hotel and Mr Johnston's personal assets obtained from the Court of Session by former associates.

The accounts of County Properties and Developments, owned by leisure and gaming tycoon Tom Paulo, one of Scotland's richest men, show that he has taken a 25% stake in the hotel. Mr Paulo was unavailable for comment yesterday.

Mr Johnston, a 6ft 3ins plumber, put his name on the building map with the development of Stacks leisure park in Dundee on the site of the former Camperdown jute works. It was a deal that made him a multi-millionaire and allowed him to indulge his passion for Ferraris, Bentleys and Rolls-Royces. He even owned a Winnebago that was said to have belonged to Ronald Reagan.

He has had a reputation as a charmer although a ''rough diamond'', and enjoyed extremely good contacts throughout Scotland. One of the social highlights of his year was his annual Burns supper, to which many well-known Scots personalities were invited.

Although he has been able to attract investment, not all his projects enjoyed the success of Stacks. A shopfitting business he owned was wound up in 1996 with reported debts of (pounds) 600,000.

He planned to set up a chain of ''Busters'' fish-and-chip restaurants and opened his first on the Stacks leisure park and others in Newcastle and Manchester. Several others were in the pipeline when the business went into liquidation in 1998 with the loss of scores of jobs and reported debts of more than (pounds) 350,000. His own personal loss from that venture was said to be more than (pounds) 2m.

Another firm, Cox-Johnston (Developments) Ltd, went into liquidation in 1999.

Yesterday a spokeswoman at the hotel said neither he nor Mr Delaney were available to comment.

Mr Johnston is now understood to spend most of his time in South Africa, where he is believed to have bought, with a business partner, the Louisvale wine estate in the Devon Valley just outside Stellenbosch. Mr Delaney is also on the board.

At the winery a spokeswoman said Mr Johnston was at home and provided his telephone number. A gentleman with a Scottish accent responded, asked who was calling, said ''I think you have the wrong number'', then hung up.

Mr Johnston is also understood to have acquired Stellenbosch landmark La Gratitude, a 200-year-old house, which he plans to turn into a top eatery with a five-star hotel behind it.

Positions of power

Lord Fraser

He has a number of remunerated directorships, according to the House of Lords register of interests.

He is: non-executive chairman, J K X Oil and Gas plc; non-executive chairman, Nova Technology Management Ltd; non-executive director, Alkane Energy plc; non-executive director, Carnoustie Golf Course Hotel & Resort Ltd; non-executive director, International Petroleum Exchange; non-executive director, London Metal Exchange; non-executive director, Total Holdings UK Ltd.

Michael Johnston

Companies House lists Michael Johnston as having 11 directorships.

The companies involved are: Cox-Johnston (Management Services) Ltd; The Carnoustie Club Ltd; Carnoustie Golf Course Hotel & Resort Ltd; Mount Melville Holiday Homes Ltd; Louisvale Wine Import Company Ltd; Louisvale Wines (UK) Ltd; Louisvale Wines Ltd; Mount Melville Golf Club Ltd; Carnoustie Hotel Golf Resort & Spa

Ltd; Anchor Developments Ltd; and Inveraldie Properties plc.